⚠️US equities suffered their worst week in over a year as the AI rally hit a serious wall:

The Nasdaq plunged -4.7% on Friday, its largest single-day decline since April 2025.

The S&P 500 fell -2.6%, snapping its 9-consecutive week winning streak, which would have become the longest since 1985 had it extended to a 10th week.

A stronger than expected jobs report (in the headlines) revived Federal Reserve rate hike expectations, while Broadcom's disappointing earnings forecast, growing questions over AI economics, and Meta's surprise equity raising announcement combined to trigger a broad and painful repricing of AI-related stocks.

Markets are now fully pricing in a 25 basis point hike by December 2026 and a ~60% probability of a move as early as October.

This sent 2-year Treasury yields up ~15 basis points on the day and the US Dollar to its best session in 2 months.

The AI selloff was broad, with the S&P 500 information technology sector falling -5.8%, the AI Winners basket tumbling -7.0%, memory stocks collapsing -11%, and the semiconductor index posting its worst single day since the 2020 Crisis.

WTI crude also fell to ~$90 despite little progress in US-Iran peace talks, with the nations experiencing their worst clashes since the April ceasefire.

Gold plunged back below its 200-day moving average by the largest margin since September 2023, erasing all its year-to-date gains, while Bitcoin fell below $60,000 for the first time since October 2024, reversing all its post-election gains.

It seems Friday was just a preview of what happens when heavily leveraged and overcrowded positions unwind at the same time.

Performance this WEEK:

S&P 500 -2.6%
Nasdaq -4.7%
Russell 2000 -2.9%
Dow Jones -0.3%
US 10-year Treasury yield +9 bps
Bitcoin -17%
Bank Index +2.6%
VIX +40% front mth VIX futures +12%
US Dollar Index +1.2%
Gold -5.0%
Silver -8.9%
WTI Crude Oil +3.6%

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